Fotowatio Renewable Ventures looks to exit solar project in India

Posted on by KNBT

Greenstone Energy Advisors, an investment bank focused on the Indian renewable energy sector, is running the sales process.

Greenstone Energy Advisors, an investment bank focused on the Indian renewable energy sector, is running the sales process.

New Delhi: Fotowatio Renewable Ventures (FRV), owned by Abdul Latif Jameel Energy and Environmental Services, plans to exit its only investment in the Indian solar power space, said two people aware of the development.

Edelweiss Infrastructure Yield Plus Fund and Actis LLP’s Sprng Energy Pvt. Ltd have evinced interest in FRV’s solar power project located in Ananthapuramu Solar Park in Andhra Pradesh. Greenstone Energy Advisors, an investment bank focused on the Indian renewable energy sector, is running the sales process.

The proposed exit by FRV, the largest Arabian green energy utility, comes at a time when Indian solar tariffs are hovering around record lows. The winning tariff for a 2,000 megawatts (MW) tender by state-run NTPC Ltd last week was at ₹2.59 per unit. In May 2017, India had achieved a record low solar power tariff of ₹2.44 per unit. In early July, tariffs had again touched ₹2.44 per unit in an auction conducted by state-run Solar Energy Corp. of India Ltd (SECI).

“A sales process is being run for the project,” said one of the two people cited above, requesting anonymity. FRV was awarded the project in a reverse auction conducted by SECI, wherein a 25-year agreement at ₹4.43 per unit was signed.

While email queries to Jose Luis Blasco, FRVs managing director for Asia region on 29 July remained unanswered, Rahul Goswami, founder, Greenstone, in an emailed response, said: “As a firm policy, we cannot comment on transactions which are happening in the market.”

An Actis LLP spokesperson also declined to comment. Queries emailed to an Edelweiss spokesperson on 30 July and to Abdul Latif Jameel Energy and Environmental Services on 17 August remained unanswered.

The $1 billion alternative investment fund managed by Edelweiss Alternative Asset Advisors Ltd invests in operating assets across sectors, including roads, renewables and transmission. Mint reported on 1 August about Edelweiss Infrastructure Yield Plus Fund having talks with Engie SA to pick up a significant stake in the French energy firm’s Indian solar business.

After selling Ostro Energy Pvt. Ltd to ReNew Power Ventures in India’s largest clean energy deal in April, global private equity fund Actis LLP is also readying a larger game plan for its second green energy platform, Sprng Energy Pvt. Ltd, by growing its 750 megawatts (MW) portfolio to 1.75 gigawatts (GW).

The hectic activity in the solar power space follows the finance ministry’s decision to impose a safeguard duty of 25% in the first year, followed by a 5% reduction for the first six months of the second year to 20%. A duty of 15% will be levied in the last six months of the second year. The announcement was made on 30 July on the recommendations of Directorate General of Trade Remedies. However, it has been temporarily suspended.

“We expect some delay in project implementation on account of the duty as the ‘change in law’ clause is expected to be sought for ~12 GW of under-construction projects. Logically, domestic module manufacturers would become the main suppliers to solar developers in India. However, their supply capacities are far short of the annual demand of the sector. Hence, we expect a rise in capital costs over the near-term due to the duty. Additionally, in light of falling module prices, the impact of the duty remains to be seen,” Crisil Research wrote in a 17 August report.

India, the world’s third-largest energy consumer after the US and China, is running the world’s largest clean energy programme to achieve 175GW of clean energy capacity by 2022 as part of its global climate change commitments. Its plan to add 100GW of solar capacity by 2022 includes 40 GW from rooftop projects.

“CRISIL Research expects solar power capacity addition to ramp up to 56-58 GW between fiscals 2019 and 2023, compared with 20 GW between fiscals 2014 and 2018,” the research firm added.

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